Laying down the law: the research behind regulatory reforms

Professor Richard Macrory (UCL Laws) describes how his
Review of regulatory sanctions became a new Act, inspiring culture change
within the UK Government, and legislators abroad.

“Academic lawyers are rarely given the opportunity to see
their ideas turn into actual legislation, and it is both an exhilarating and
somewhat unsettling experience. The
Regulatory Enforcement and Sanctions Act 2008 has been described as a
revolution in the way we think about the design of regulatory sanctions in this
country, and the coming months see a critical period in its practical
implementation.

As an environmental lawyer I had long been interested in the
process of enforcement, and recent board membership of the Environment Agency
provided fresh insights on the challenges facing a core regulator in enforcing
environmental law. I was struck by the extent to which we were largely reliant
on the criminal law when things went wrong, and conducted research at UCL on
the wider range of types of sanctions that were available to many equivalent
environmental regulators in other countries.

In 2005 I was appointed by the Cabinet Office to lead a
Review on regulatory sanctions as part of the Government’s general regulatory
reform programme. The Review went
way beyond the field of environmental law, covering some 61 national regulators
as well as local authorities, and almost every area of business regulation one
could think of – from environmental, health and safety, trading standards, food
standards, planning and building controls to charities and night-club bouncers.

Initially a daunting prospect for a fairly specialised
lawyer, but one that turned out to have distinct advantages. I was forced to examine underlying
principles and processes rather than getting drowned in the technical details
of the individual laws, and the Review quickly revealed problems that were
common across the board.

In almost every area of regulation there was a small
percentage of individuals or operators
who were quite blatantly not complying with the law, and often making large
sums of money by undercutting legitimate businesses. But then there were companies who broke regulations through
oversight, carelessness or an unexpected accident – but with serious consequences
and where a simple warning was not a sufficient response.

The problem in most areas of regulation was that for largely
historical reasons the only real sanction the regulator possessed was the
criminal law. Sentencing
discretion should be able to distinguish the truly intentional from the
careless, but in reality we were making the criminal law do far too much work,
and there was a danger we were devaluing its impact where it was most needed.

My Review identified important improvements that could be
made to the criminal law system, but the headline recommendations were to give
regulators a greater range of sanctions beyond the criminal law – notably civil
sanctions taking the form of significant financial penalties but without going
through the criminal courts. The
criminal law would be reserved for the truly criminal but without undermining
the overall effectiveness of a sanctions system.

The Government accepted all the recommendations in the
Review. The Regulatory Enforcement
and Sanctions Act was passed to provide framework powers that could then be
drawn down by Ministerial Order to individual regulators as and when
needed. This month Parliament
debated the first such Order which grants these powers to the main environmental
regulators. A trial is planned
amongst local authorities in the field of trading standards, and other
regulators may soon follow suit.

The first such sanction will probably not be imposed until
the end of the year, and we are some way from judging how effective the new
system will be. But former
colleagues in the Environment Agency talk of a positive culture change already
taking place internally, and, even more gratifyingly, other countries are now
looking to the Review for application in their jurisdictions.

Perhaps more importantly in what will be an election year, the process should
survive any possible change in Government. The recent Conservative Green Paper
on Regulatory Reform concludes by stating: ‘We will evaluate the progress which
has already been made towards implementing the Macrory Principles of regulatory
justice, which aim to improve both the flexibility, consistency and
appropriateness of regulatory sanctions, to discover whether it is possible and
desirable to speed up the process in the future.’ ”

Richard Macrory is Professor of Environmental Law at UCL, and is Director of the UCL Centre for Law and the Environment.